Auckland-based currency brokerage Global Brokers NZ said it is closing due to losses suffered after the Swiss central bank's shock move to ditch the franc's cap against the euro.
In a statement posted on the website of associated company Excel Markets, director David Johnson said most of its clients in a franc position were on the losing side and sustained losses amounting to far greater than their account equity.
"When a client cannot cover their losses it is passed onto us. GBL can no longer meet regulatory minimum capitalisation requirements of NZ$1 million and will not be able to resume business."
``Losses incurred on trades that could not be exited due to illiquidity were losses incurred directly with the liquidity provider and we do not have the ability to reimburse those.''
The franc surged as much as 38 percent versus the greenback overnight after the Swiss National Bank's move in Zurich and gained more than 15 percent against all of more than 150 currencies.
Johnson said "hundreds of withdrawal requests."
All client funds are in segregated accounts and "100 percent of positive client equity or balance is safe and withdraw able immediately," he said. However, GBL had sustained "a total loss of operating capital."
"The interbank market for francs was illiquid for hours after the event and no traders with an open franc position were able to close it for a significant period of time, at any broker."
He said in the statement ``we would like to offer our sincerest apologies for this devastating turn of events, and to thank you for being such a supportive group."
Efforts to get comment from Global Brokers, which has an office on Queen St, were not successful. Global Brokers said it had received authorisation from the Financial Markets Authority and was licensed as a futures dealer in November 2012.